steps to build wealth
steps to build wealth

4 Steps to Build Wealth and Increase Your Net Worth

Read the Article

Your net worth is defined as the sum total of your assets minus your total liabilities (including loans, debt and mortgages). A positive net worth means that your assets outnumber your liabilities, and a negative net worth means you have more liabilities than assets. Your net worth is one way to measure your overall wealth, and one of the biggest indicators of financial health is a positive (and increasing) net worth. Here are 4 steps to help you build your wealth and increase your overall net worth.

Track Your Progress

It may seem strange to have the very first step to build wealth and increase your net worth be to track your progress. You haven’t even done anything yet, so is there really even anything to track? The fact of the matter is that just the act of tracking your progress will do wonders for your motivation to stick with it. A quote sometimes attributed as Pearson’s Law and other times to author Thomas S. Monson says:

“When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.”

Calculate your net worth, and then write it down. If you feel comfortable, share it with your friends and family. Then set a reminder to track it regularly — every month is a good cadence to look back and analyze how your finances held up during the month. As you follow the remaining steps to build wealth, it will be amazing to look back and see how far you’ve come.

Eliminate (Most) Debt

After you start tracking your net worth, the next most important step is to take a look at your debt, and make a plan to eliminate most of it. There are several debt elimination strategies that people have come up with to make it easier to eliminate debt. One is the debt snowball, where you put all of your excess money towards your debt with the smallest balance, until it’s paid off. Another is the debt avalanche or debt blizzard, where you instead start with your debt that has the highest interest rate.

Either strategy can work, but no matter which strategy you choose, make a written plan for how you are going to get rid of your debt. Debt has a huge impact on your net worth, and eliminating debt will make a huge difference in your net worth. Once you’ve gotten rid of your high-interest debt like credit card debt, then you can stop and consider whether to pay off your mortgage or student loans early. There are advantages and disadvantages to each approach, so weigh the pros and cons and make the right choice for you.

Cut Expenses (And Save The Difference)

Another great step towards building wealth is cutting expenses. Take a look at your budget and see if there is anything that you can cut out each month. But don’t just eliminate an unnecessary expense — make sure that you transfer that money out into a separate savings account. Earning extra money from a side hustle is another great way to build wealth. Again, you want to make sure that (if possible) you set aside any “extra” money from your budget and invest it for the future.

Invest in Appreciating Assets

Once you have a budget and are living below your means, a solid emergency fund and then some extra money to invest, make sure that you invest in appreciating assets. Appreciating assets are ones whose value is likely to increase over time. Appreciating assets include:

  • Stocks, bonds and mutual funds
  • Real Estate (either your own primary residence or an investment property)
  • Precious metals like gold and silver
  • Yourself — you are your own biggest asset, and investing in yourself through more education or training is almost always a good idea.

The biggest example of a depreciating asset is a car. While you may need a car to get to work or live your life, most vehicles lose some of their value every day. Investing lots of money into a car that is more expensive than you need is rarely a solid financial choice.

The Bottom Line

Making the conscious decision to take steps to build wealth and increase your net worth puts you ahead of many others who are meandering through life day by day. A good first step is to track (and share) your net worth — fortunately, Mint makes it easy to see and track your net worth over time. Next, work on eliminating any debt that carries high interest rates. This will pay immediate returns since eliminating a debt that has a 24.99% interest rate is financially equivalent to getting a 24.99% return on your money.

Look for ways you can cut expenses, or earn extra money through a side hustle. But don’t just put that money into your regular checking account — save it into a separate account and invest that towards growing your net worth. And once you do have money to invest, make sure that the vast majority of your investments are in appreciating assets like stocks, mutual funds, real estate or yourself. Before you know it, you will be well on your way to an ever-growing net worth.

Dan Miller
Dan Miller

Written by Dan Miller

Dan Miller is a freelance writer and founder of, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids. More from Dan Miller


If you're ready to start being intentional about your finances. Here are 4 steps to build wealth and increase your overall net worth.